Laying the Foundation for a Bright Future: Assessing Progress
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Laying the Foundation for a Bright Future Assessing Progress Under Phase 1 of India’s National Solar Mission Interim Report: April 2012 Prepared by Council on Energy, Environment and Water Natural Resources Defense Council Supported in part by: ABOUT THIS REPORT About Council on Energy, Environment and Water The Council on Energy, Environment and Water (CEEW) is an independent nonprofit policy research institution that works to promote dialogue and common understanding on energy, environment, and water issues in India and elsewhere through high-quality research, partnerships with public and private institutions and engagement with and outreach to the wider public. (http://ceew.in). About Natural Resources Defense Council The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 1.3 million members and online activists. Since 1970, our lawyers, scientists, and other environmental specialists have worked to protect the world’s natural resources, public health, and the environment. NRDC has offices in New York City; Washington, D.C.; Los Angeles; San Francisco; Chicago; Livingston and Beijing. (www.nrdc.org). Authors and Investigators CEEW team: Arunabha Ghosh, Rajeev Palakshappa, Sanyukta Raje, Ankita Lamboria NRDC team: Anjali Jaiswal, Vignesh Gowrishankar, Meredith Connolly, Bhaskar Deol, Sameer Kwatra, Amrita Batra, Neha Mathew Neither CEEW nor NRDC has commercial interests in India’s National Solar Mission, nor has either organization received any funding from any commercial or governmental institution for this project. Acknowledgments The authors of this report thank government officials from India’s Ministry of New and Renewable Energy (MNRE), NTPC Vidyut Vyapar Nigam (NVVN), and other Government of India agencies, as well as United States government officials. We would also like to thank former MNRE Secretary Deepak Gupta. We are grateful to the solar developers, financial institutions, solar manufacturers, solar energy experts, academics, and community members who shared their feedback and helped inform the findings of this report. The authors would also like to thank the following people, who acted as peer reviewers, for their valuable insights: Pierre Bull, Suman Kumar, Peeyush Mohit, Rana Mookherjee, Rajesh Peddu, P. Ramana Reddy, A. P. Shrivastava, Ashish Shrotriya, Cai Steger, and Atul Vijaykar. We would especially like to thank Shakti Sustainable Energy Foundation and our other funders for their generous support. This report is supported, in part, by Shakti Sustainable Energy Foundation. The views expressed and analysis in this document do not necessarily reflect views of the Foundation. The Foundation does not guarantee the accuracy of any data included in this publication nor does it accept any responsibility for the consequences of its use. Scope of Report This report focuses on the Jawaharlal Nehru National Solar Mission’s objectives, targets, and incentives for grid-connected solar photovoltaic (PV) projects in India. The Mission’s goals relating to solar thermal and off-grid solar projects are not covered in this report. Methodology This report adopts a whole-of-system approach by focusing on various public and private institutions operating in the solar ecosystem, the record and challenges of commissioning projects, the bankability of projects, the building of a robust manufacturing base, and analysis of the related enabling environment for the industry. The process included initial identification of key solar stakeholders in India and internationally to understand stakeholder perspectives and barriers to effective implementation of the National Solar Mission. Primary research was conducted through extensive discussions during in-person meetings, phone conversations, and written communication, and during conferences and workshops, including SOLARCON and Intersolar 2011. The organizations also engaged periodically with the Ministry of New and Renewable Energy as well as other government agencies to understand their approaches, innovations, and concerns about the Solar Mission. NRDC Director of Communications: Phil Gutis NRDC Deputy Director of Communications: Lisa Goffredi NRDC Publications Director: Alex Kennaugh NRDC Publications Editor: Carlita Salazar CEEW Project Administration: Meena Sarkar CEEW Communications: Prachi Gupta Design and Production: Tanja Bos COVER PHOTO: CREDIT: PUNJ LLOYD © Natural Resources Defense Council; Council on Energy, Environment and Water, April 2012 FOREWORD India is blessed with abundant sunshine, in fact 300 days’ worth in most regions. Average incident solar radiation ranges between 4 and 7 kilowatt-hour per day per square metre – much higher than the amount of solar radiation in many other countries. Meanwhile, 70 percent of India’s primary energy supply relies on fossil fuels while hundreds of millions of people need access to modern sources of energy. In 2010 India launched the Jawaharlal Nehru National Solar Mission, one of the world’s largest solar energy programmes. The aim is to install 20000 megawatts (MW) of grid-connected solar power and 2000 MW of off-grid solar power by 2022. This is an ambitious mission with the promise of responding, in part, to India’s climate challenge and to increasing energy access. Like India, most of the solar potential world over is in tropical countries. But by one count, until 2010, eight of the top ten countries with installed solar photovoltaic capacity were in temperate zones. Clearly, there is a long way to go before India realises its potential in solar energy but the National Solar Mission has positioned itself to play a significant catalytic role. How it could do so is the subject of this report. A nascent solar industry is beginning to take shape in India, with more than 500 MW of capacity installed already. Competitive bids for projects have also driven prices for solar power down rapidly. But installed capacity and prices do not complete the picture. There is a need to understand challenges in installing projects, so that developers are able to do so on time and feed electricity into the grid at committed capacities. There are also questions about choice of technology and policies related to sourcing cells, modules and other equipment. And, perhaps most importantly, solar projects have to be financially viable to attract the levels of investment necessary to meet the Mission’s targets. These issues are interconnected and interdependent, critical to the evolution of a solar ecosystem. In order to examine all the dimensions of the ecosystem, the Council on Energy, Environment and Water (CEEW) and the Natural Resources Defense Council (NRDC) partnered to produce Laying the Foundation for a Bright Future. This report adopts a “whole-of-system” approach, identifying multiple stakeholders and focusing on all aspects of grid-connected solar power: selection, deployment and commissioning of projects; bankability and the role of various financial channels; the development of a robust manufacturing base; and the creation of an enabling environment with regard to land, power evacuation, skills, and so forth. I wish to congratulate the team comprising independent researchers from CEEW and NRDC, which has not only conducted in depth analysis of its own but also engaged with a wide set of stakeholders within and outside India. I am sure that the findings and recommendations of this report would be relevant not only for government agencies (at the national and state levels), but also for project developers, manufacturers, financiers, donor agencies, R&D and research institutions, and others keen on the success of the National Solar Mission. Jamshyd N. Godrej Mumbai Co-Chairperson, Council on Energy, Environment and Water April 2012 PAGE i | Laying the Foundation for a Bright Future TABLE OF CONTENTS Foreword .......................................................................................................................................................................................... i I. Executive Summary ...................................................................................................................................................................... v II. Introduction .................................................................................................................................................................................1 III. Stakeholders: Need for a Solar Ecosystem ................................................................................................................................4 Strategic Level .........................................................................................................................................................................5 Project Level ............................................................................................................................................................................5 Supporting Environment ..........................................................................................................................................................5 IV. Phase 1 of the National Solar Mission: “Building Solar India” ...................................................................................................6 Phase 1 Project Analysis and Discussion ................................................................................................................................7 Phase 1’s Tiered Approach ......................................................................................................................................................9